A quarter century ago, I got into the disaster recovery business by accident. I was walking through my company’s loading dock and found a huge fireproof safe. When I asked what was in it, I was told, “Reel-to-reel backup tapes of all of the software that we develop and sell to our customers, and our accounting records.” Since I was the company’s IT security guy (we didn’t have CISOs back then), I commented to my manager that if an earthquake rendered the safe unreachable, we could be out of business. My manager encouraged me to outline a strategy and budget for disaster recovery, but my plan was subsequently shelved due to the expense. That was in April of 1989.
Six months later, on October 17th, 1989, the Loma Prieta earthquake rocked northern California, measuring 6.9 on the Richter scale. Immediately following the quake, I was called into the CFO’s office and asked if I could start implementation of my disaster recovery plan and how long it would take for us to be protected.
The plan started with taking tapes offsite, working to ensure that a backup system could take over in a pinch, documenting data flows, building call trees, and exercising everything. “Crawl, walk, run,” as I like to say. Later that year, I received certificate #117 as a Certified Disaster Recovery Professional and the rest, as they say, is history.
We escaped disaster that time and were able to consider the earthquake a timely warning. Another company was not so lucky. In 1984, Laury Ostrow created Chi Pants, a new kind of pants with an extra square of fabric for added comfort and movement. His client list included A-list celebrities and his pants were so popular that the Santa Cruz mayor TWICE proclaimed Chi Pants’ Day.
When the Loma Prieta earthquake struck, their primary building was destroyed and their accounting records irretrievably lost. While Ostrow found other space to get some of his 85 employees back to work, he couldn’t get his production line to resume.
In the aftermath of the earthquake, the workers at Chi Pants’ manufacturing factory stopped showing up. If Ostrow wanted Chi Pants to be sewed, he needed to pay a substantial premium for using supervisors at the sewing machines…but only if Chi Pants paid their outstanding invoices to the manufacturer first. Unfortunately, without their accounting records, Chi Pants had no way to invoice many of their customers and thereby get the cash needed to foot the bill. And it’s no surprise that Chi Pants’ customers didn’t volunteer that they owed Chi Pants money.
Chi Pants was forced to borrow from private lenders, but many of the new products they had developed for the Christmas season were never made. As you can imagine, Christmas that year in Santa Cruz – a region devastated by the quake – wasn’t very merry anyway. Chi Pants’ lost roughly $1 million, could not get out from under its debts, and subsequently folded in 1991.
I wish I could have saved Chi Pants and the other companies that Loma Prieta put out of business…I wish I could have put their records in a fireproof safe and shipped it to a secure offsite location along with those of my own company. But I couldn’t. What I can do, however, is to spread the word far and wide: after a disaster, it’s often the little things that can bring a company down. For example, Chi Pants still had a way to make their wares and a place to sell them, but a little thing like accounting records prevented them from accessing the working capital they so desperately needed to survive.
The story of Chi Pants’ history and their earthquake-driven demise can be seen on this video. It’s quite the cautionary tale, however, so beware – you just might go running down the hall to find out more about your company’s business resiliency capabilities.
Finally, I want to leave all companies with a thought, in honor of 2014 being the 25th anniversary of the Loma Prieta earthquake: Will you trust your company’s survival to fickle Lady Luck, or will you be confident because your organization and its supply chain have business continuity planning programs in place?
This article was originally published on the Forbes Sungard AS Voice blog.